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  • Buy-to-Let

    Incentivising Tenants?

    Hi,

    I read a piece in "Landlords Insider Secrets Newsletter" on motivating tenants to pay rent on time, and wondered whether any Tribes landlords are in the habit of incentivising tenants for timely payments or to take extra care of the property? For me, paying rent on time should be a given, but I can see some benefit for incentivising a higher standard of property care that reduces maintenance costs. Similarly, some sort of referral benefit for finding a new tenant when they move on or to fill another property. It would be interesting to hear whether anyone has had success with incentivising, what incentives were offered, and any drawbacks.

    Thanks

    Guy
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    Guy Brown
    Blue Infinity Property Group
    M 07791-661491 | T 0118 3360366 | E guy@blueinfinityproperty.com<script data-cfhash='f9e31' type="text/javascript">/* http://www.blueinfinityproperty.com

    * New build residential developments and flat conversions in the Home Counties
    * High end HMOs in Reading and Bracknell

    I don't use any at the moment, however 1 I have been thinking about offering £50 per month for extra notice when leaving the property. At present my AST's are nearly all on a month to month basis so Tenant only needs to give 1 months notice, which sometimes means voids. Having a few extra months notice would mean no voids so it a no brainer.
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    Save Money on All of Your Utilities Attract Prospects to Your MLM Business

    Great idea John! Having the extra notice time would help in securing the best next tenants and facilitate planning for any significant maintenance that might be required.
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    Guy Brown
    Blue Infinity Property Group
    M 07791-661491 | T 0118 3360366 | E guy@blueinfinityproperty.com<script data-cfhash='f9e31' type="text/javascript">/* http://www.blueinfinityproperty.com

    * New build residential developments and flat conversions in the Home Counties
    * High end HMOs in Reading and Bracknell

    I have previously incentivised tenants to allow me to come in an do any remedial work between tenancies. If you have picked up a few things at an inspection that the tenant will be liable for you can offer to fix them at a reduced price whilst carrying out some other work that they are not liable for. I have also 'encouraged' existing tenants to allow me to show new prospective tenants round (some can be awkward in this regard) and talk to them about the type of landlord that I am (obviously not the odd one that you just know will stitch you up) by offering cash back at the end of their tenancy - every little counts for some of these tenants. For example, if you expect a 1 month void but the tenant allows you to complete all of the remedial work under their tenancy and helps you get a new tenant with next to no void then why not give them a week's rent as a thank you? The landlord wins and the tenant wins. It's all about knowing your tenants and which ones will play fair!
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    Another good idea, thanks Terry. If remedial works can be done prior to current tenants moving out it's like getting a big discount on the cost of the works by having seamless transition to new tenancy. In the event works are required to sort out damage that would have affected the tenant's deposit, presumably some negotiation on costs above wear and tear (with clear reference to the inventory and schedule of condition) would be required. And then perhaps a signed agreement of works to be carried out prior to the end of the tenancy and a corresponding incentive reduction in the amount levied against the deposit. I guess according to the AST they're obliged to repair damage but I wonder it often gets left to the landlord till after the tenancy ends, delaying a new tenancy.
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    Guy Brown
    Blue Infinity Property Group
    M 07791-661491 | T 0118 3360366 | E guy@blueinfinityproperty.com<script data-cfhash='f9e31' type="text/javascript">/* http://www.blueinfinityproperty.com

    * New build residential developments and flat conversions in the Home Counties
    * High end HMOs in Reading and Bracknell

    Guy,
    That's exactly right I have found that avoiding voids saves me more than the cost of the work. If a tenant gives notice I arrange an inspection ASAP - point out all that needs to be fixed at their expense and give them a rough price and then hit them with the I can halve that for you if you help me. They usually jump at the chance of saving some money and are happy to allow workman in and show prospective tenants around on my behalf - saving me time and shortening voids It's amazing how you can save £100s for the sake of knocking £50 off the tenant's bill and they think you are doing them the favour!
    Cheers
    Terry
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    Hi everyone!

    I was in Court today against a former tenant who still owed a bit of rent but hadn't paid up. The tenant's rent used to be £425pcm.

    The Judge said I should redraft my tenancy agreement to say that the rent is £500pcm and I will give £75 discount if rent is paid on or before 1st of the month -- and presumably a sliding scale of £50 if paid by 10th and £25 if paid by 20th of the month.

    The Judge said incentives were allowed (like the utility companies give you £1 off if you pay by a certain date) but late payment fees/charges were a penalty (like a parking fine) and were not allowed under Unfair Contract Terms.

    Does anyone incentivise tenants this way?

    On a tangential but related note, imagine what this approach would do to the LHA calculations if rents suddenly increased by £75 or £100pcm....................

    Most grateful for any thoughts or insights.

    Gloriana
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    I was talking with a barrister earlier in the week who was commenting on some judges not understanding the real world. So when a lender sees your AST it will be higher than market rent.

    Every month you could get a different amount which will then tell the lender that the tenant has poor financial control.Not usually asked for in BTL finance but in commercial arena it is.

    If you are a letting agent it will be a logistical nightmare tracking all the different payments.

    My incentive is if they pay the rent on time they stay in their home.
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    Regards Simon Searchlight Finance

    Fulfil Your Property Ambitions

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    Searchlight Finance Ltd is authorised and regulated by the Financial Conduct Authority reference 743220.

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    My incentive is giving them the freedom to improvise and they then make my house their home.
    I`m holding on to it for a lifetime so I dont really care what colour the paint is or what picture hooks hang where.
    Let them choose.
    The more they think of it as their home the longer they will stay and the more they will look after it
    Ive had new kitchens new bathrooms new tiling new everything because of this approach.
    Sometimes I pay for the parts sometimes i dont
    Labour is often free.
    Ive saved thousands and thousands of pounds by this relaxed long term approach to internal changes.
    I often select tenants on this criteria. Their positive desire to refurb incentivises me to rent it to them. Its symbiotic
    I have my freedom so I give them theirs
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    Jonathan Clarke. http://www.buytoletmk.com